By Brian Knowlton

Published: December 22, 2000

WASHINGTON—
Vice President-elect Dick Cheney sought Thursday to dampen controversy over whether he and President-elect George W. Bush were emphasizing the threat of an economic recession as a means of preemptively laying blame on President Bill Clinton's administration should one arrive.

White House officials have expressed mounting displeasure with repeated warnings from Mr. Bush and Mr. Cheney about a possible recession.

Mr. Cheney, after a meeting Thursday with Senator Joseph Lieberman, who was Al Gore's running mate on theDemocratic ticket, denied that he and Mr. Bush were being overly pessimistic about the economy for the sake of political gain, especially to increase support for their 10-year, $1.3 trillion tax cut.

"We don't want to talk down the economy, clearly," Mr. Cheney said, "and I think both President-elect Bush and myself have tried to be cautious."

"But there does seem to be a lot of evidence out there that, in fact, the economy has slowed down some," he added. "Whether or not this ultimately results in a recession — that is, negative real growth — nobody knows."

Meanwhile, in the Texas capital, Austin, a misty-eyed Mr. Bush announced his formal resignation as governor in a midday ceremony in the state Senate chamber. Lieutenant Governor Rick Perry, also a Republican, was sworn in to succeed him.

Mr. Bush also held two meetings Thursday to draw attention to his plans for changing U.S. schools. And he continued working on high-level personnel choices, amid mounting pressure from the Republican right for conservative cabinet appointments.

At the resignation ceremony, Mr. Bush looked more relaxed than he has in recent days. In a setting where he clearly felt at home, Mr. Bush said, "There's only one thing that would cause me to leave early — and that's to become the president." When a round of applause had subsided, he continued, "So today I announce my resignation as the 46th governor of Texas."

Mr. Bush was first elected Texas governor in 1994, then was easily re-elected in 1998. It is the only elective office he has held.

In a meeting in Washington on Tuesday with Mr. Bush, Mr. Clinton said he thought a recession — which economists define as two consecutive quarters of negative economic growth — was unlikely. Mr. Bush declined to comment.

The director of the National Economic Council, Gene Sperling, said Thursday that Mr. Bush was injecting "fear and anxiety" into financial markets to engender political support for his proposed tax-cut program.

"This is a time period where a new president should, I think, be being a bit reassuring," Mr. Sperling said on ABC-TV. "Instead, what you're seeing is President-elect Bush and his team actually talking down our economy, actually probably injecting more fear and anxiety into the economy than is justified, and I think that's a serious mistake."

Mr. Sperling said most economists were predicting a growth rate in the coming year of about 3 percent, below the heady rates of recent years but still, he said, "pretty solid."

Some economists have warned that the apparent bid by the new administration to ensure that it not be blamed for an economic slowdown could become a self-fulfilling prophecy.

Mr. Cheney warned this month that the country might be on the "front edge of a recession." On Thursday, he softened his language while insisting that he and Mr. Bush were merely describing economic realities.

He said the views of the incoming administration were "very similar" to those of the Federal Reserve Board chairman, Alan Greenspan, with whom Mr. Bush met on Monday. "We are prepared to do whatever is required to maintain our long-term growth and prosperity as a nation," Mr. Cheney said.

President-elect Bush designated four cabinet picks Wednesday, headed by Paul O'Neill, chairman of Alcoa Inc., as Treasury secretary. With less than a month before his inauguration on Jan. 20, Mr. Bush is working hard to complete his cabinet.

But a strong hint of division in the Republican Party, one of the first since the election was decided, emerged Wednesday as Governor Marc Racicot of Montana, a moderate who had been touted as a choice for attorney general, said he was withdrawing his name from contention for "family reasons."

While there was no official indication to the contrary, several conservative Republicans had expressed mounting frustration as Mr. Bush turned for his early cabinet choices to people known as mainstream Republicans.

No announcements were made Thursday, but two prominent Republican governors appeared on the verge of being chosen for top posts. Governor Christie Whitman of New Jersey, who is considered liberal on social issues, is said to have agreed to serve as administrator of the Environmental Protection Agency.

Governor Tommy Thompson, known for cutting taxes and the size of the state bureaucracy in Wisconsin, said that Mr. Bush had offered him the post of secretary of Health and Human Services, but that he wanted to oversee the Transportation Department. He said no decision was likely until after Christmas.

Some conservative Republicans had threatened open protest if Mr. Bush did not turn to their ranks to fill sensitive posts such as the attorney general.

Mr. Racicot, a former Montana attorney general who gained the public eye by forcefully defending the Bush cause during the Florida election dispute, had spent hours with Mr. Bush and his staff this week in Austin, fanning speculation about his possible nomination.

It was thus something of a surprise when an aide announced from Helena, Montana, "The governor has asked that his name be removed from consideration for the Bush cabinet, based on family issues here." Mr. Racicot, 52, and his wife, Theresa, have five grown children.

After Mr. Racicot's withdrawal, the favorite for the post of attorney general — strongly supported by conservatives — was Governor Frank Keating of Oklahoma. Conservatives also support Senator John Ashcroft of Missouri and former Senator John Danforth of Missouri.

Mr. Bush plans to pick Governor James Gilmore of Virginia as chairman of the Republican National Committee, The Washington Post reported Thursday, citing party sources. Mr. Gilmore, who is considered a moderate conservative, was recently elected chairman of the Republican Governors' Association.

Another cabinet prospect with conservative backing is former Senator Dan Coats of Indiana, as defense secretary.